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Garcia Vs.

SSS
[G.R. NO. 170735 : December 17, 2007]
IMMACULADA L. GARCIA, Petitioner, v. SOCIAL SECURITY
COMMISSION LEGAL AND COLLECTION, SOCIAL SECURITY
SYSTEM, Respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
This is Petition for Review on Certiorari under Rule 45 of the Rules of
Court is assailing the 2 June 2005 Decision
1
and 8 December 2005
Resolution
2
both of the Court of Appeals in CA-G.R. SP No. 85923. the
appellate court affirmed the - - - Order and - - - Resolution both of the
Social Security Commission (SSC) in SSC Case No. 10048, finding
Immaculada L. Garcia (Garcia), the sole surviving director of Impact
Corporation, petitioner herein, liable for unremitted, albeit collected,
SSS contributions.
Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon,
Pacita Fernandez, and Consuelo Villanueva were directors
3
of Impact
Corporation. The corporation was engaged in the business of
manufacturing aluminum tube containers and operated two factories.
One was a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while
the other was an Extrusion Plant in Cainta, Metro Manila, which
processed the "slugs" into aluminum collapsible tubes and similar
containers for toothpaste and other related products.
Records show that around 1978, Impact Corporation started
encountering financial problems. By 1980, labor unrest besieged the
corporation.
In March 1983, Impact Corporation filed with the Securities and
Exchange Commission (SEC) a Petition for Suspension of
Payments,
4
docketed as SEC Case No. 02423, in which it stated that:
[Impact Corporation] has been and still is engaged in the business of
manufacturing aluminum tube containers x x x.
x x x
In brief, it is an on-going, viable, and profitable enterprise.
On 8 May 1985, the union of Impact Corporation filed a Notice of
Strike with the Ministry of Labor which was followed by a declaration of
strike on 28 July 1985. Subsequently, the Ministry of Labor certified
the labor dispute for compulsory arbitration to the National Labor
Relations Commission (NLRC) in an Order
5
dated 25 August 1985. The
Ministry of Labor, in the same Order, noted the inability of Impact
Corporation to pay wages, 13th month pay, and SSS remittances due
to cash liquidity problems. A portion of the order reads:
On the claims of unpaid wages, unpaid 13th month pay and non-
remittance of loan amortization and SSS premiums, we are for
directing the company to pay the same to the workers and to remit
loan amortizations and SSS premiums previously deducted from their
wages to the Social Security System. Such claims were never
contested by the company both during the hearing below and in our
office. In fact, such claims were admitted by the company although it
alleged cash liquidity as the main reason for such non-payment.
WHEREFORE, the dispute at Impact Corporation is hereby certified to
the National Labor Relations Commission for compulsory arbitration in
accordance with Article 264 (g) of the Labor Code, as amended.
x x x
The company is directed to pay all the entitled workers unpaid wages,
unpaid 13th month pay and to remit to the Social Security System
loan amortizations and SSS premiums previously deducted from the
wages of the workers.
6

On 3 July 1985, the Social Security System (SSS), through its Legal
and Collection Division (LCD), filed a case before the SSC for the
collection of unremitted SSS premium contributions withheld by
Impact Corporation from its employees. The case which impleaded
Impact Corporation as respondent was docketed as SSC Case No.
10048.
7

Impact Corporation was compulsorily covered by the SSS as an
employer effective 15 July 1963 and was assigned Employer I.D. No.
03-2745100-21.
In answer to the allegations raised in SSC Case No. 10048, Impact
Corporation, through its then Vice President Ricardo de Leon,
explained in a letter dated 18 July 1985 that it had been confronted
with strikes in 1984 and layoffs were effected thereafter. It further
argued that the P402,988.93 is erroneous. It explained among other
things, that its operations had been suspended and that it was waiting
for the resolution on its Petition for Suspension of Payments by the
SEC under SEC Case No. 2423. Despite due notice, the corporation
failed to appear at the hearings. The SSC ordered the investigating
team of the SSS to determine if it can still file its claim for unpaid
premium contributions against the corporation under the Petition for
Suspension of Payments.
In the meantime, the Petition for Suspension of Payments was
dismissed which was pending before the SEC in an Order
8
dated 12
December 1985. Impact Corporation resumed operations but only for
its winding up and dissolution.
9
Due to Impact Corporation's liability
and cash flow problems, all of its assets, namely, its machineries,
equipment, office furniture and fixtures, were sold to scrap dealers to
answer for its arrears in rentals.
On 1 December 1995, the SSS-LCD filed an amended Petition
10
in SSC
Case No. 10048 wherein the directors of Impact Corporation were
directly impleaded as respondents, namely: Eduardo de Leon, Ricardo
de Leon,
11
Pacita Fernandez, Consuelo Villanueva, and petitioner. The
amounts sought to be collected totaled P453,845.78 andP10,856.85
for the periods August 1980 to December 1984 and August 1981 to
July 1984, respectively, and the penalties for late remittance at the
rate of 3% per month from the date the contributions fell due until
fully paid pursuant to Section 22(a) of the Social Security Law,
12
as
amended, in the amounts of P49,941.67 andP2,474,662.82.
Period Unremitted
Amount
Penalties
(3% Interest Per
Month)
Total
August 1980 to
December 1984
P 453,845.78 P49, 941.67 503,787.45
August 1981 to July
1984
P 10,856.85 P2, 474, 662.82 2,485,519.67
Summonses were not served upon Eduardo de Leon, Pacita Fernandez,
and Consuelo Villanueva, their whereabouts unknown. They were all
later determined to be deceased. On the other hand, due to failure to
file his responsive pleading, Ricardo de Leon was declared in default.
Petitioner filed with the SSC a Motion to Dismiss
13
on grounds of
prescription, lack of cause of action and cessation of business, but the
Motion was denied for lack of merit.
14
In her Answer with
Counterclaim
15
dated 20 May 1999, petitioner averred that Impact
Corporation had ceased operations in 1980. In her defense, she
insisted that she was a mere director without managerial functions,
and she ceased to be such in 1982. Even as a stockholder and director
of Impact Corporation, petitioner contended that she cannot be made
personally liable for the corporate obligations of Impact Corporation
since her liability extended only up to the extent of her unpaid
subscription, of which she had none since her subscription was already
fully paid. The petitioner raised the same arguments in her Position
Paper.
16

On 23 January 1998, Ricardo de Leon died following the death, too, of
Pacita Fernandez died on 7 February 2000. In an Order dated 11 April
2000, the SSC directed the System to check if Impact Corporation had
leviable properties to which the investigating team of respondent SSS
manifested that the Impact Corporation had already been dissolved
and its assets disposed of.
17

In a Resolution dated 28 May 2003, the Social Security Commission
ruled in favor of SSS and declared petitioner liable to pay the
unremitted contributions and penalties, stating the following:
WHEREFORE, premises considered, this Commission finds, and so
holds, that respondents Impact Corporation and/or Immaculada L.
Garcia, as director and responsible officer of the said corporation, is
liable to pay the SSS the amounts of P442,988.93, representing the
unpaid SS contributions of their employees for the period August 1980
to December 1984, not inclusive, and P10,856.85, representing the
balance of the unpaid SS contributions in favor of Donato Campos,
Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period
August 1980 to December 1984, not inclusive, as well as the 3% per
month penalty imposed thereon for late payment in the amounts
of P3,194,548.63 andP78,441.33, respectively, computed as of April
30, 2003. This is without prejudice to the right of the SSS to collect
the penalties accruing after April 30, 2003 and to institute other
appropriate actions against the respondent corporation and/or its
responsible officers.
Should the respondents pay their liability for unpaid SSS contributions
within sixty (60) days from receipt of a copy of this Resolution, the 3%
per month penalty for late payment thereof shall be deemed condoned
pursuant to SSC Res. No. 397-S.97, as amended by SSC Res. Nos.
112-S.98 and 982-S.99, implementing the provision on condonation of
penalty under Section 30 of R.A. No. 8282.
In the event the respondents fail to pay their liabilities within the
aforestated period, let a writ of execution be issued, pursuant to
Section 22 (c) [2] of the SS Law, as amended, for the satisfaction of
their liabilities to the SSS.
18

Petitioner filed a Motion for Reconsideration
19
of the afore-quoted
Decision but it was denied for lack of merit in an Order
20
dated 4
August 2004, thus:
Nowhere in the questioned Resolution dated May 28, 2003 is it stated
that the other directors of the defunct Impact Corporation are
absolved from their contribution and penalty liabilities to the SSS. It is
certainly farthest from the intention of the petitioner SSS or this
Commission to pin the entire liability of Impact Corporation on movant
Immaculada L. Garcia, to the exclusion of the directors of the
corporation namely: Eduardo de Leon, Ricardo de Leon, Pacita
Fernandez and Conzuelo Villanueva, who were all impleaded as
parties-respondents in this case.
The case record shows that there was failure of service of summonses
upon respondents Eduardo de Leon, Pacita Fernandez and Conzuelo
Villanueva, who are all deceased, for the reason that their
whereabouts are unknown. Moreover, neither the legal heirs nor the
estate of the defaulted respondent Ricardo de Leon were substituted
as parties-respondents in this case when he died on January 23, 1998.
Needless to state, the Commission did not acquire jurisdiction over the
persons or estates of the other directors of Impact Corporation, hence,
it could not validly render any pronouncement as to their liabilities in
this case.
Furthermore, the movant cannot raise in a motion for reconsideration
the defense that she was no longer a director of Impact Corporation in
1982, when she was allegedly eased out by the managing directors of
Impact Corporation as purportedly shown in the Deed of Sale and
Assignment of Shares of Stock dated January 22, 1982. This defense
was neither pleaded in her Motion to Dismiss dated January 17, 1996
nor in her Answer with Counterclaim dated May 18, 1999 and is, thus,
deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of
Civil Procedure, which has suppletory application to the Revised Rules
of Procedure of the Commission.
Finally, this Commission has already ruled in the Order dated April 27,
1999 that since the original Petition was filed by the SSS on July 3,
1985, and was merely amended on December 1, 1995 to implead the
responsible officers of Impact Corporation, without changing its causes
of action, the same was instituted well within the 20-year prescriptive
period provided under Section 22 (b) of the SS Law, as amended,
considering that the contribution delinquency assessment covered the
period August 1980 to December 1984.
In view thereof, the instant Motion for Reconsideration is hereby
denied for lack of merit.
Petitioner elevated her case to the Court of Appeals via a Petition for
Review. Respondent SSS filed its Comment dated 20 January 2005,
and petitioner submitted her Reply thereto on 4 April 2005.
The Court of Appeals, applying Section 28(f) of the Social Security
Law,
21
again ruled against petitioner. It dismissed the petitioner's
Petition in a Decision dated 2 June 2005, the dispositive portion of
which reads:
WHEREFORE, premises considered, the petition is DISMISSED for lack
of merit. The assailed Resolution dated 28 May 2003 and the Order
dated 4 August 2004 of the Social Security Commission are AFFIRMED
in toto.
22

Aggrieved, petitioner filed a Motion for Reconsideration of the
appellate court's Decision but her Motion was denied in a Resolution
dated 8 December 2005.
Hence, the instant Petition in which petitioner insists that the Court of
Appeals committed grave error in holding her solely liable for the
collected but unremitted SSS premium contributions and the
consequent late penalty payments due thereon. Petitioner anchors her
Petition on the following arguments:
I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING
HEAD, DIRECTOR OR PARTNER IS LIABLE ONLY FOR THE PENALTIES
OF THE EMPLOYER CORPORATION AND NOT FOR UNPAID SSS
CONTRIBUTIONS OF THE EMPLOYER CORPORATION.
II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS
OR PARTNERS WHO SHALL BE LIABLE TOGETHER WITH THE
CORPORATION. IN THIS CASE, PETITIONER HAS CEASED TO BE A
STOCKHOLDER OF IMPACT CORPORATION IN 1982. EVEN WHILE SHE
WAS A STOCKHOLDER, SHE NEVER PARTICIPATED IN THE DAILY
OPERATIONS OF IMPACT CORPORATION.
III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY
DIRECTORS, TRUSTEES OR OFFICERS WHO PARTICIPATE IN
UNLAWFUL ACTS OR ARE GUILTY OF GROSS NEGLIGENCE AND BAD
FAITH SHALL BE PERSONALLY LIABLE. OTHERWISE, BEING A MERE
STOCKHOLDER, SHE IS LIABLE ONLY TO THE EXTENT OF HER
SUBSCRIPTION.
IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC
LOSSES, EVENTS WHICH WERE NEITHER DESIRED NOR CAUSED BY
ANY ACT OF THE PETITIONER. THUS, BY REASON OF FORTUITOUS
EVENTS, THE PETITIONER SHOULD BE ABSOLVED FROM LIABILITY.
V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN
EXERTING EFFORTS TO ACQUIRE JURISDICTION OVER THE LEVIABLE
ASSETS OF IMPACT CORPORATION, PERSON/S AND/OR ESTATE/S OF
THE OTHER DIRECTORS OR OFFICERS OF IMPACT CORPORATION.
VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT
RENDERING A JUDGMENT BY DEFAULT AGAINST THE DIRECTORS
UPON WHOM IT ACQUIRED JURISDICTION.
Based on the foregoing, petitioner prays that the Decision dated 2
June 2005 and the Resolution dated 8 December 2005 of the Court of
Appeals be reversed and set aside, and a new one be rendered
absolving her of any and all liabilities under the Social Security Law.
In sum, the core issue to be resolved in this case is whether or not
petitioner, as the only surviving director of Impact Corporation, can be
made solely liable for the corporate obligations of Impact Corporation
pertaining to unremitted SSS premium contributions and penalties
therefore.
As a covered employer under the Social Security Law, it is the
obligation of Impact Corporation under the provisions of Sections 18,
19 and 22 thereof, as amended, to deduct from its duly covered
employee's monthly salaries their shares as premium contributions
and remit the same to the SSS, together with the employer's shares of
the contributions to the petitioner, for and in their behalf.
From all indications, the corporation has already been dissolved.
Respondents are now going after petitioner who is the only surviving
director of Impact Corporation.
A cursory review of the alleged grave errors of law committed by the
Court of Appeals above reveals there seems to be no dispute as to the
assessed liability of Impact Corporation for the unremitted SSS
premiums of its employees for the period January 1980 to December
1984.
There is also no dispute as to the fact that the employees' SSS
premium contributions have been deducted from their salaries by
Impact Corporation.
Petitioner in assailing the Court of Appeals Decision, distinguishes the
penalties from the unremitted or unpaid SSS premium contributions.
She points out that although the appellate court is of the opinion that
the concerned officers of an employer corporation are liable for
the penalties for non-remittance of premiums, it still affirmed the SSC
Resolution holding petitioner liable for the unpaid SSS premium
contributions in addition to the penalties.
Petitioner avers that under the aforesaid provision, the liability does
not include liability for the unremitted SSS premium contributions.
Petitioner's argument is ridiculous. The interpretation petitioner would
like us to adopt finds no support in law or in jurisprudence. While the
Court of Appeals Decision provided that Section 28(f) refers to the
liabilities pertaining to penalty for the non-remittance of SSS employee
contributions, holding that it is distinct from the amount of the
supposed SSS remittances, petitioner mistakenly concluded that
Section 28(f) is applicable only to penalties and not to the liability of
the employer for the unremitted premium contributions. Clearly, a
simplistic interpretation of the law is untenable. It is a rule in statutory
construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be
considered together with the other parts, and kept subservient to the
general intent of the whole enactment.
23
The liability imposed as
contemplated under the foregoing Section 28(f) of the Social Security
Law does not preclude the liability for the unremitted amount.
Relevant to Section 28(f) is Section 22 of the same law.
SEC. 22. Remittance of Contributions. - - (a) The contributions
imposed in the preceding Section shall be remitted to the SSS within
the first ten (10) days of each calendar month following the month for
which they are applicable or within such time as the Commission may
prescribe. Every employer required to deduct and to remit such
contributions shall be liable for their payment and if any contribution is
not paid to the SSS as herein prescribed, he shall pay besides the
contribution a penalty thereon of three percent (3%) per month from
the date the contribution falls due until paid. If deemed expedient and
advisable by the Commission, the collection and remittance of
contributions shall be made quarterly or semi-annually in advance, the
contributions payable by the employees to be advanced by their
respective employers: Provided, That upon separation of an employee,
any contribution so paid in advance but not due shall be credited or
refunded to his employer.
Under Section 22(a), every employer is required to deduct and remit
such contributions penalty refers to the 3% penalty that automatically
attaches to the delayed SSS premium contributions. The spirit, rather
than the letter of a law determines construction of a provision of law.
It is a cardinal rule in statutory construction that in interpreting the
meaning and scope of a term used in the law, a careful review of
the whole law involved, as well as the intendment of the law, must
be made.
24
Nowhere in the provision or in the Decision can it be
inferred that the persons liable are absolved from paying the
unremitted premium contributions.
Elementary is the rule that when laws or rules are clear, it is
incumbent upon the judge to apply them regardless of personal belief
or predilections - when the law is unambiguous and unequivocal,
application not interpretation thereof is imperative.
25
However, where
the language of a statute is vague and ambiguous, an interpretation
thereof is resorted to. An interpretation thereof is necessary in
instances where a literal interpretation would be either impossible or
absurd or would lead to an injustice. A law is deemed ambiguous when
it is capable of being understood by reasonably well-informed persons
in either of two or more senses.
26
The fact that a law admits of
different interpretations is the best evidence that it is vague and
ambiguous.
27
In the instant case, petitioner interprets Section 28(f) of
the Social Security Law as applicable only to penalties and not to the
liability of the employer for the unremitted premium contributions.
Respondents present a more logical interpretation that is consistent
with the provisions as a whole and with the legislative intent behind
the Social Security Law.
This Court cannot be made to accept an interpretation that would
defeat the intent of the law and its legislators.
28

Petitioner also challenges the finding of the Court of Appeals that
under Section 28(f) of the Social Security Law, a mere director or
officer of an employer corporation, and not necessarily a "managing"
director or officer, can be held liable for the unpaid SSS premium
contributions.
Section 28(f) of the Social Security Law provides the following:
(f) If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its
managing head, directors or partners shall be liable to the penalties
provided in this Act for the offense.
This Court agrees in petitioner's observation that the SSS did not even
deny nor rebut the claim that petitioner was not the "managing head"
of Impact Corporation. However, the Court of Appeals rightly held that
petitioner, as a director of Impact Corporation, is among those officers
covered by Section 28(f) of the Social Security Law.
Petitioner invokes the rule in statutory construction called ejusdem
generic; that is, where general words follow an enumeration of
persons or things, by words of a particular and specific meaning, such
general words are not to be construed in their widest extent, but are
to be held as applying only to persons or things of the same kind or
class as those specifically mentioned. According to petitioner, to be
held liable under Section 28(f) of the Social Security Law, one must be
the "managing head," "managing director," or "managing partner."
This Court though finds no need to resort to statutory construction.
Section 28(f) of the Social Security Law imposes penalty on:
(1) the managing head;
(2) directors; or
(3) partners, for offenses committed by a juridical person
The said provision does not qualify that the director or partner should
likewise be a "managing director" or "managing partner."
29
The law is
clear and unambiguous.
Petitioner nonetheless raises the defense that under Section 31 of the
Corporation Code, only directors, trustees or officers who participate in
unlawful acts or are guilty of gross negligence and bad faith shall be
personally liable, and that being a mere stockholder, she is liable only
to the extent of her subscription.
Section 31 of the Corporation Code, stipulating on the liability of
directors, trustees, or officers, provides:
SEC. 31. Liability of directors, trustees or officers. - Directors or
trustees who willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or who are guilty of gross negligence
or bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such
directors, or trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
Basic is the rule that a corporation is invested by law with a
personality separate and distinct from that of the persons composing it
as well as from that of any other legal entity to which it may be
related. A corporation is a juridical entity with legal personality
separate and distinct from those acting for and in its behalf and, in
general, from the people comprising it. Following this, the general rule
applied is that obligations incurred by the corporation, acting through
its directors, officers and employees, are its sole liabilities.
30
A
director, officer, and employee of a corporation are generally not held
personally liable for obligations incurred by the corporation.
Being a mere fiction of law, however, there are peculiar situations or
valid grounds that can exist to warrant the disregard of its
independent being and the lifting of the corporate veil. This situation
might arise when a corporation is used to evade a just and due
obligation or to justify a wrong, to shield or perpetrate fraud, to carry
out other similar unjustifiable aims or intentions, or as a subterfuge to
commit injustice and so circumvent the law.
31
Thus, Section 31 of the
Corporation Law provides:
Taking a cue from the above provision, a corporate director, a trustee
or an officer, may be held solidarily liable with the corporation in the
following instances:
1. When directors and trustees or, in appropriate cases, the officers of
a corporation - -
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate
affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation,
its stockholders or members, and other persons.
2. When a director or officer has consented to the issuance of watered
stocks or who, having knowledge thereof, did not forthwith file with
the corporate secretary his written objection thereto.
3. When a director, trustee or officer has contractually agreed or
stipulated to hold himself personally and solidarily liable with the
Corporation.
4. When a director, trustee or officer is made, by specific provision of
law, personally liable for his corporate action.
32

The aforesaid provision states:
SEC. 31. Liability of directors, trustees or officers. - Directors or
trustees who willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or who are guilty of gross negligence
or bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such
directors, or trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
The situation of petitioner, as a director of Impact Corporation when
said corporation failed to remit the SSS premium contributions falls
exactly under the fourth situation. Section 28(f) of the Social Security
Law imposes a civil liability for any act or omission pertaining to the
violation of the Social Security Law, to wit:
(f) If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its
managing head, directors or partners shall be liable to the penalties
provided in this Act for the offense.
In fact, criminal actions for violations of the Social Security Law are
also provided under the Revised Penal Code. The Social Security Law
provides, in Section 28 thereof, to wit:
(h) Any employer who, after deducting the monthly contributions or
loan amortizations from his employees' compensation, fails to remit
the said deductions to the SSS within thirty (30) days from the date
they became due shall be presumed to have misappropriated such
contributions or loan amortizations and shall suffer the penalties
provided in Article Three hundred fifteen of the Revised Penal Code.
(i) Criminal action arising from a violation of the provisions of this Act
may be commenced by the SSS or the employee concerned either
under this Act or in appropriate cases under the Revised Penal Code: x
x x.
Respondents would like this Court to apply another exception to the
rule that the persons comprising a corporation are not personally liable
for acts done in the performance of their duties.
The Court of Appeals in the appealed Decision stated:
Anent the unpaid SSS contributions of Impact Corporation's
employees, the officers of a corporation are liable in behalf of a
corporation, which no longer exists or has ceased operations. Although
as a rule, the officers and members of a corporation are not personally
liable for acts done in performance of their duties, this rule admits of
exception, one of which is when the employer corporation is no longer
existing and is unable to satisfy the judgment in favor of the
employee, the officers should be held liable for acting on behalf of the
corporation. Following the foregoing pronouncement, petitioner, as one
of the directors of Impact Corporation, together with the other
directors of the defunct corporation, are liable for the unpaid SSS
contributions of their employees.
33

On the other hand, the SSC, in its Resolution, presented this
discussion:
Although as a rule, the officers and members of a corporation are not
personally liable for acts done in the performance of their duties, this
rule admits of exceptions, one of which is when the employer
corporation is no longer existing and is unable to satisfy the judgment
in favor of the employee, the officers should be held liable for acting
on behalf of the corporation. x x x.
34

The rationale cited by respondents in the two preceding paragraphs
need not have been applied because the personal liability for the
unremitted SSS premium contributions and the late penalty thereof
attaches to the petitioner as a director of Impact Corporation during
the period the amounts became due and demandable by virtue of a
direct provision of law.
Petitioner's defense that since Impact Corporation suffered irreversible
economic losses, and by reason of fortuitous events, she should be
absolved from liability, is also untenable. The evidence adduced totally
belies this claim. A reference to the copy of the Petition for Suspension
of Payments filed by Impact Corporation on 18 March 1983 before the
SEC contained an admission that:
"[I]t has been and still is engaged in business" and "has been and still
is engaged in the business of manufacturing aluminum tube
containers" and "in brief, it is an on-going, viable, and profitable
enterprise" which has "sufficient assets" and "actual and potential
income-generation capabilities."
The foregoing document negates petitioner's assertion and supports
the contention that during the period involved Impact Corporation was
still engaged in business and was an ongoing, viable, profitable
enterprise. In fact, the latest SSS form RIA submitted by Impact
Corporation is dated 7 May 1984. The assessed SSS premium
contributions and penalty are obligations imposed upon Impact
Corporation by law, and should have been remitted to the SSS within
the first 10 days of each calendar month following the month for which
they are applicable or within such time as the SSC prescribes.
35

This Court also notes the evident failure on the part of SSS to issue a
judgment in default against Ricardo de Leon, who was the vice-
president and officer of the corporation, upon his non-filing of a
responsive pleading after summons was served on him. As can be
gleaned from Section 11 of the SSS Revised Rules of Procedure, the
Commissioner is mandated to render a decision either granting or
denying the petition. Under the aforesaid provision, if respondent fails
to answer within the time prescribed, the Hearing Commissioner may,
upon motion of petitioner, or motu proprio, declare respondent in
default and proceed to receive petitioner's evidence ex parte and
thereafter recommend to the Commission either the granting or denial
of the petition as the evidence may warrant.
36

On a final note, this Court sees it proper to quote verbatim
respondents' prefatory statement in their Comment:
The Social Security System is a government agency imbued with a
salutary purpose to carry out the policy of the State to establish,
develop, promote and perfect a sound and viable tax exempt social
security system suitable to the needs of the people throughout the
Philippines which shall promote social justice and provide meaningful
protection to members and their beneficiaries against the hazards of
disability, sickness, maternity, old-age, death and other contingencies
resulting in loss of income or financial burden.
The soundness and viability of the funds of the SSS in turn depends on
the contributions of its covered employee and employer members,
which it invests in order to deliver the basic social benefits and
privileges to its members. The entitlement to and amount of benefits
and privileges of the covered members are contribution-based. Both
the soundness and viability of the funds of the SSS as well as the
entitlement and amount of benefits and privileges of its members are
adversely affected to a great extent by the non-remittance of the
much-needed contributions.
37

The sympathy of the law on social security is toward its beneficiaries.
This Court will not turn a blind eye on the perpetration of injustice.
This Court cannot and will not allow itself to be made an instrument
nor be privy to any attempt at the perpetration of injustice.
Following the doctrine laid down in Laguna Transportation Co., Inc. v.
Social Security System,
38
this Court rules that although a corporation
once formed is conferred a juridical personality separate and distinct
from the persons comprising it, it is but a legal fiction introduced for
purposes of convenience and to subserve the ends of justice. The
concept cannot be extended to a point beyond its reasons and policy,
and when invoked in support of an end subversive of this policy, will
be disregarded by the courts.
WHEREFORE, pursuant to the foregoing, the Decision of the Court of
Appeals dated 2 June 2005 in CA-G.R. SP No. 85923 is
hereby AFFIRMED WITH FINALITY. Petitioner Immaculada L.
Garcia, as sole surviving director of Impact Corporation is
hereby ORDERED to pay for the collected and unremitted SSS
contributions of Impact Corporation. The case is REMANDED to the
SSS for computation of the exact amount and collection thereof.
SO ORDERED.
Ynares-Santiago, J., Chairperson, Austria-Martinez, Nachura,
Reyes, JJ., concur.